But, starting a new business comes with a whole set of risks and challenges, including investment, staffing, success rates, and overheads.
The good news?
Despite the drawbacks listed above, starting your own business can be a life and income-enhancing opportunity that brings a better lifestyle balance, independence, and a sense of achievement.
So, we’ve compiled 21 entrepreneur facts and statistics for existing and wannabe entrepreneurs to mull over before embarking on a new money-making adventure.
Let’s kick things off with a few general statistics about entrepreneurs…
Entrepreneur Facts & Statistics (Editor’s Choice)
- There are 582 million entrepreneurs worldwide.
- 27 million Americans are in the midst of starting or running their own business
- Around 16 million Americans are self-employed.
- The average age of a small business owner is 50.3 years old.
- Around 20% of small businesses fail during their first year.
Now you’ve digested those tasters, let’s dive in a bit deeper and look at a few of the above facts and statistics… and some fresh ones, in more detail.
Table of Contents
1. 88% of Millionaires in the US are Self-Made Entrepreneurs
According to Fidelity Investments research, a 2017 study found that 88% of millionaires are self-made, with the remaining 12% having inherited significant money. Interestingly, the majority of millionaires also went to college!
2. There are 582 Million Entrepreneurs Around the World
(Global Entrepreneurship Monitor)
According to statistics from Global Entrepreneurship Monitor (GEM), if you decide to head down the entrepreneurial route, you’re part of a pretty sizeable worldwide club. GEM surveyed 65 different global economies and found entrepreneurialism to be alive and well, with an estimated 582 million entrepreneurs residing around the globe.
Another recent study conducted by GEM, found that 40% of freshly-minted entrepreneurs across 35 of 50 countries agree or strongly agree that their motivation for launching a business is to make a difference in the world.
3. The Biggest Motivation for Entrepreneurs is Being Their Own Boss
When it comes to ‘why’ people want to become entrepreneurs, a report by Guidant Financial found 26% of respondents desired to be their own boss. With a further 23% citing that they wanted to pursue their passions. Whereas, only 19% stated that seeing an opportunity to present themselves was their core motivator. Lastly, an even smaller 6% started their own business because they lost their job.
4. 60% of People That Start Small Businesses are Aged Between 40 and 60
GuidantFinancial studied small businesses in 2019 and talked to more than 2,700 small entrepreneurs. Their research supports earlier statistics and again corrects popular misconceptions about entrepreneurs being mostly younger.
5. The US is the Best Place for Entrepreneurs
(Global Entrepreneurship Index)
According to the Global Entrepreneurship Index, the US ranks highest for entrepreneurs and developing small businesses. In second place is Switzerland, followed by Canada, the UK, and Australia. Whereas, at the bottom of the GEDI list are Bangladesh, Murundi, Mauritania, and Chad.
The GEDI considers the entrepreneurial abilities, attitudes, and aspirations of each country’s local populus. This is then measured against the country’s infrastructure (e.g., broadband, transport, etc.).
6. 59% of Entrepreneurs Who Applied for a Loan Did So to Expand
(Federal Reserve Banks)
The Federal Reserve Banks carried out some research in 2018 and discovered 59% of entrepreneurs who applied for a loan did so to expand. Whereas, 43% of business owners used loans to cover operating expenses, with 36% taking out loans to refinance other loans to secure the future of their business.
7. The Internet is the Most Significant Source of Advice for Entrepreneurs
(TSheets by QuickBook)
According to research conducted by TSheets by QuickBooks, just 19% of business owners want to learn from their colleagues, with 26% turning to the internet first for advice, and only 14% using books. Smaller still at just 11%, reported asking family was their first port of call for help.
The same study highlights that the most common problems faced by entrepreneurs today are:
- Their competition
- Poor cashflow
- Paying their taxes
- The wider US economy
- Business growth
Unsurprisingly, the same report found that 35% of small businesses (that had been running for less than a year), saw a decline in profits, and 30% were just breaking even. More established small businesses have fared somewhat better, with only 11% seeing a loss and 38% a profit of under $50,000.
8. More Than 65% of American Entrepreneurs Believe They Can Start Their Own Business
(Global Entrepreneurship Monitor)
The 2019 Global Entrepreneurship Monitor (GEM) report found the number of entrepreneurs who ‘believe they can start their own business’ was highest among Americans.
GEM interviewed a cohort of people across 50 countries. In 36 of those 50 countries, the collective assessment was that they perceived themselves to have the necessary experience and knowledge to launch their own business. The GEM states this is the “highest level” of such perception since its study began back in 1999.
9. 97% of Self-Employed People Don’t Plan on Returning to Traditional Work
Yes, that’s right! The same FreshBooks 2019 annual report also found that 45% of millennials said they would work past retirement and 47% Gen Z and 61% of Baby Boomers, all through choice.
Perhaps that statistic isn’t surprising since the same research found that entrepreneurs and self-employed professionals enjoy greater career satisfaction (71%) in comparison to people holding down traditional jobs (61%). Interestingly, this satisfaction level increases with age, income, and work-life balance.
10. Around 20% of Small Businesses Fail in Their First Year
Why’s this the case? Experts attribute the following reasons:
- There sometimes isn’t a profitable market for the product/service
- A lack of clarity surrounding the products/services on offer.
- A lack of company structure and organization.
- The entrepreneur didn’t adequately prepare to be a business owner, so they weren’t ready to take on all the responsibilities that come with running a business.
- According to the US Bank, cash flow issues are a substantial reason businesses close up shop. In fact, 82% of small companies cite this as their main reason for closing.
*Our 20% statistic comes from the US Small Business
11. Small Business Proprietor’s Incomes Have Increased by 15%
(US Office of Advocacy)
According to research conducted by the US Office of Advocacy in their October 2019 Small Business Buletin, business owners’ income has been trending upwards since 2016. In fact, it’s almost doubled since 2009!
This is entirely understandable given it’s both complicated and expensive to employ people. Perhaps this is why research conducted by FreshBooks found that 62% of small businesses have no staff and operate entirely alone; ‘solopreneurs,’ if you will.
Of course, there are a few small businesses with more than 5 employees, but this research found it was only 10%.
In its 2019 annual report, FreshBooks asked small business owners and self-employed professionals which skills they thought were most important for success.
The biggest hitter was having excellent communication at 54%, problem-solving at 53%, time management at 48%, adaptability at 39%, and, lastly, creativity at 26%.
As election time looms, we thought we’d throw in a few politics-related statistics for fun. GuidantFinancial asked small business owners about their politics and found that 41% were republicans, 80% of whom were men.
Democrats accounted for 29% of respondents, and 36% of that chunk were women.
Interestingly, business owners were also asked if they had had any help from the government, and 45% said that under the present administration had provided neither help nor hindrance. However, 60% of Democrats believed the government had “hindered a lot.”
This statistic provided by the WBENC (Women’s Business Enterprise National Council) is all the more remarkable when you consider in 1972, only 402,000 businesses were owned by women. Fast forward to today, and according to the WBENC, in 2017, 1,821 women-owned businesses were launched every day! Once more, women of color founded 64% of those businesses.
That’s what we like to hear – change. Diversity. Female Empowerment. Inclusivity. I wholeheartedly believe entrepreneurship should embrace these values. So, it’s great to see a few stats suggesting that ‘business’ is moving in the right direction!
16. Middle-Aged Men are the Most Successful
(MIT Sloan School / Experian)
Towards the start of this article, we said the average age of a business owner is 50.3 years. Also, it’s men who succeed the most according to MIT Sloan School. Interestingly, an Experian report into small businesses also found the average age of business owners was 50.3.
Maybe we’re seduced by success stories like Steve Jobs (21 when he helped found Apple) or Mark Zuckerberg (19 when he co-founded Facebook)? Perhaps that’s why there are so many businessmen?
However, a further report by MIT Sloan School found the average age of entrepreneurs who started their own company (men and women) who then hire someone, is 42.
17. 71% of Generation Z Business-Owning Entrepreneurs are Men
The same report from Guidant Financial found that among the younger cohort of business-owning entrepreneurs, 71% are men and 29% women.
18. Total Employment by Women-Owned Businesses Rose by 21%
A 2018 American Express report, ‘State of Owned Women Businesses’, studied the years: 2007, 2012, 2017, and 2018 to compare statistics pertaining to women-owned businesses in the US.
Amongst its many findings, including the one above, were that between 2007 and 2018, women-owned enterprises “surged 58% while all businesses increased by 12%.”
The report also found that total revenue generated from women-owned businesses jumped by 46% compared to an increase of only 36% for other companies.
19. There are 7 Women Entrepreneurs for Every 10 Male Entrepreneurs Starting a Business
This statistic came to light when Babson College studied global entrepreneurship. The same study also found that on average female entrepreneurs worldwide invest 80 cents per dollar earned back into their families. According to Babson, this drives GDP up and mortality rates down.
Babson also noted in its findings that while there are 200 million women entrepreneurs around the world, just 3% of all venture capital funding goes to women-led companies.
20. Asian People are 51% More Likely to be Business Owners
The same Experian report found that Asian people are 51% more likely to be business owners than the rest of the US population. With the Hispanic community being 25% less likely to be small business owners.
21. 20% of Women-Owned Businesses are Owned by African American Women
The same 2018 Amex report found that 2,402,600 or 20% of women-owned businesses are owned by African-American women. African-American women-owned companies represent the highest rate of growth between 2017 and 2018 of any demographic.
If you’re also wondering about Asian women-owned businesses, Amex found 1,072, 6000, or 9% of women-owned companies were owned by Asian women.
Yes, being an entrepreneur can be incredibly rewarding and fun. The message, however, is that it isn’t for the faint-hearted. We hope our collection of 21 entrepreneur facts and statistics have given you some idea about what’s involved and the importance of being prepared before launching your own venture. Otherwise, you may face becoming one of the more sorry statistics listed above, rather than the success story you want to be.